Aon Hewitt s Corporate Exchange: Moving Past Prototype

Transcription

1 Corporate Healthcare Exchange Feasibility Analysis Aon Hewitt s Corporate Exchange: Moving Past Prototype Health Insurance Exchange Summit May 3, 2013 Discussion with Best Buy Aon Hewitt Healthcare Exchange Ken Sperling

2 Where We ve Been Employer Employees & Families Carriers Health Care Cost per Employee, Providers $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $4,918 CAGR: 9.4% $12,106 From 2001 to 2011: Total health care cost increased 146% Employer cost increased 119% Employee cost increased 222% Salaries increased 36% $2,000 $ Source: Bureau of Labor Statistics, Aon Hewitt Health Value Initiative EE Contribs ER Subsidy OOP Costs

3 Addressing the Challenge Through Competition 25,000,000 Market Maturity DVD Players $600 20,000,000 $500 15,000,000 10,000,000 $400 $300 $200 # Units Avg. Unit Price 5,000,000 $ $0 # of Procedures Avg. Price (per eye) 1,600,000 1,400,000 Market Maturity Lasik Surgery $2,200 $2,100 1,200,000 $2,000 1,000, , ,000 $1,900 $1, ,000 $1, ,000 $1,600 0 $1,500 Source: MarketScope, Consumer Electronics Corp

4 Aon Hewitt Corporate Exchange: How It Works Fully insured medical, dental and vision Rx and behavioral health carved-in No HRA accounts Group contracts, employer-specific experience rating No change in tax treatment 3

5 Value Proposition Making This Work for All Stakeholders Employers Risk transfer and predictability Trend mitigation through competition, efficiency, and best-in-market contracting Focus on health and productivity Employees Greater choice of plans and carriers Superior customer experience Flexibility to tailor benefit/contribution trade-offs Carriers Market share opportunity Earnings potential Product innovation and control Attractive risk pool Operating Profit per Member Commercial Insured/ASO Multiple United 8.3 Cigna 8.8 Aetna 8.4 WellPoint 11.2 Source: Company reports and JP Morgan 4

6 2012 Aggregate Financial Results Cost Drivers Risk charges Profit charges Premium taxes Mandated benefits Commissions Cost Reducers Competition Risk adjustment Best-in-class networks/provider discounts Pricing approach Standardized designs Reduced admin/consulting costs 2012 RFP Summary 2013 Projected Self-Insured Gross Cost 2013 Corporate Exchange Gross Cost Difference $2,837,000,000 $2,804,000, % 5

7 2013 Enrollment Results and Risk Distribution The Tale of the Tape 42% of employees bought down to less expensive coverage and saved on payroll deductions 26% bought up to richer coverage than prior year (including many for whom the richer coverage had been previously unavailable) 32% of employees remained at comparable level What s covered, including preventive care, is the same across plan levels Under a true DC application the employer s cost does not vary based on plan level chosen fostering real consumerism Carrier A Carrier B Carrier C Carrier D Carrier E Carrier F Total Pro Forma Demographic Risk Adjustment 0.7% -2.2% -5.5% 2.5% 1.2% -1.4% 0.0% 6

8 Post-Enrollment Survey: Overall Enrollment Experience Consumers who agreed with the following statements: Total I like being able to choose my own carrier 93% I feel confident that I chose the health plan that offered the best value 79% The benefits enrollment process was easy for me to understand 76% I feel like the company tries very hard to make my benefits enrollment experience positive 76% I have a good understanding of how my employer and I share the cost of my medical insurance 75% 7

9 Employers Most Likely to Move to Corporate Exchange Have a compelling reason for change Aligned with monetizing their commitment in the form of a defined contribution Do not want to manage plan design and vendor relationships, but still wants to own wellness and population health Do not believe that plan design differentiates in Total Rewards Believes in competition as a way to drive efficiency and lower costs Are comfortable with employees accessing information and support from a third party 8

10 Corporate Exchange Timeline for 2014 Business case and go/no-go decisions Release RFP to interested bidders Carrier commitments; rates returned Side-by-side financial analysis Finalize companies participating in RFP for 2014 January 2013 February March April May - June 9

11 It s time to let a free market reign.